Macau Business Daily, Dec 5, 2014

MOP 6.00 Closing editor: Sara Farr

Retail chain Toys ‘R’ Us mulls shop expansion Page 4

Year III

Number 682 Friday December 5, 2014

Publisher: Paulo A. Azevedo

China’s stern new policy may benefit Ho’s Russian casino venture Page 5

Analysts: December revenues to drop at least 26pct

Advancing by degrees

Page 5

CTM ready to face competition Page 6

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t least 70 percent have never been promoted. According to a recent survey conducted by the Macau Management Association. Two-thirds of city workers have never been given the opportunity to advance their careers. Gaming industry employees have it worst because too many are chasing too few positions. While only 20 percent of marketing and public relations respondents were given a break. Those with qualifications and a planned career path tended to fare better in the promotion stakes Page

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Deep pockets

Brought to you by

HSI - Movers December 4

Name

%Day

Bank of Communicatio

7.96

China Petroleum & Ch

7.59

PetroChina Co Ltd

7.05

China Shenhua Energy

6.97

CNOOC Ltd

4.77

Want Want China Hol

-0.58

Sino Land Co Ltd

-1.27

Tingyi Cayman Island

-2.11

Sands China Ltd

-3.10

Galaxy Entertainment

-3.38

Source: Bloomberg

www.macaubusinessdaily.com

I SSN 2226-8294

The Macau Government has been frugal. It has enough ‘financial savings’ to last 12 months. That’s more than 100 of the 187 economies tracked by the IMF can claim. Gaming revenues may have plunged for six consecutive months but the city’s surplus could still reach MOP100 billion this year

Out of the race

Page

It had been rumoured. Now it’s official. Macau has been dropped from next year’s WTCC race calendar. Eurosport Events confirmed it will race the touring cars nearer to home. All the signs are that the exciting TC 3 International Series will fill the vacuum. The Macau Grand Prix Committee is expected to comment later in the year

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Brought to you by

2014-12-5

2014-12-6

2014-12-7

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Power rebirth It’s China’s ‘new normal’. Reaching almost every economic sector. Energy and power suppliers, however, are starting to push for evolution. While coal miners try to increase prices to offset lower demand. Nuclear state firms look at merging

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Pages 8 & 9

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December 5, 2014

Macau

Pansy Ho: 6 months’ consecutive fall of GGR “not a pessimistic picture” The Shun Tak boss said that while Macau is still in a “leading” position in terms of gaming markets, operators will have to come up with more attractive events to entice more visitors Stephanie Lai

sw.lai@macaubusinessdaily.com

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he consecutive decline seen in the city’s gross gaming revenue in the past six months does not present a “very pessimistic picture” but a slowing trend following a decade of rapid growth in the gaming sector, where the next step for the city’s casino operators is to create more attractive events and introduce more diversified sources of client, co-chairperson of MGM China Holdings Ltd Pansy Ho Chiu King told media yesterday.

“I think for any industries, for sure there are different cyclical conditions,” Ms. Ho remarked. “For the six consecutive months of gaming revenue, firstly we don’t think that this presents a very pessimistic picture.”

“We think that actually this is normal: we’re talking about this consecutive fall in gaming revenue for six months that happened after a decade of continuous double-digit growth [in gaming revenue]. It now presents a slowing trend... compared with other gaming markets, we’re still in the leading position.”

Ms Ho, also the managing director of ferry operator and property development conglomerate Shun Tak Holdings Ltd, made the remark on the sidelines of the opening of a new Toys ‘R’ Us store yesterday.

According to information released by the Gaming Inspection and Coordination Bureau, Macau’s gross gaming revenue dropped 19.6 per cent year-on-year to MOP24.3 billion (US$3.04 billion) in November, from MOP30.2 billion the same period last year – a result that marks a

fall in gaming revenue for the sixth consecutive month and also the first time it has happened since June 2009.

“The government hopes that we, the [gaming] sector, can have new ideas and develop new sources of clients,” Ms. Ho said, adding “we can think of more attractive events which contain Macau features and mark us differently from the other neighbouring cities.

And I hope by that we can have more visitors coming here.”

In a recent interview with Chineselanguage Guangzhou Daily, she did however admit that the gaming industry here is facing more operational pressure under the visa restrictions imposed on mainland Chinese visitors, the most significant source of the city’s tourism and gaming business.

Optimistic outlook The latest tightened transit visa rule announced by the Zhuhai Immigration Department on Monday was that mainland visitors coming here had

to present flight tickets with designated seats valid within the visa period.

“The visa restrictions imposed on mainland visitors has added to the gaming industry’s operational pressure, and in the short term it is not easy to introduce new client sources,” Ms. Ho said in the interview with Guangzhou Daily, published yesterday.

In the interview, Ms. Ho expressed optimism in attracting more international clients once Macau is 20 minutes away from Hong Kong International Airport when the two places see the completion of the Hong Kong-Zhuhai-Macau Bridge due to open in 2016.

“But mainland visitors are still the main client source for the gaming industry [here]. In the coming year we have to remain cautious in our operation. In the long term our model should be like that of Las Vegas, where the main item for profits is not the gaming but the entertainment and related expenses,” Ms. Ho told the Guangzhou-based media outlet.

CCAC received 5pct more complaints in 2013 Last year, the Commission Against Corruption had a 5 per cent increase in the number of complaints. The former Commissioner Against Corruption, Fong Man Chong, who was replaced on Monday by André Cheong Weng Chon, defined 2013 as ‘very intense’ João Santos Filipe

jsfilipe@macaubusinessdaily.com

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he Commission Against Corruption (CCAC) received a total of 896 new complaints during 2013, the annual report of the Commission for last year, which was published yesterday, shows. This is a 5 per cent increase over 2012, when CCAC received 852 complaints.

‘The year 2013 was very intense for the Commission Against Corruption (CCAC), which is not related to the growing number of cases but the nature of the cases, which were technically more complex and broader’, the Commissioner Against Corruption, Fong Man Chong, who was replaced last Monday by André Cheong Weng Chon, wrote. ‘On the other hand, the intensity of the year is also related to the growing expectations from Macau residents in relation to the role of the CACC’, he added.

In fact, since 2010 the number of complaints has been increasing every year, with this value the highest recorded in four years. The number of new complaints in 2013 was only overtaken by that of 2009, when a total of 923 new complaints were filed.

From the total of 896 cases, the majority (59.6 per cent, 534) were classified as administrative complaints, while the remaining (40.4 per cent, 362) were considered criminal cases.

Of the 362 criminal cases, 292 were considered eligible from preliminary

investigation. As at December 2013, the CCAC had solved or archived 236 cases but this number included cases from 2012. In relation to 2012, the number of solved or archived cases increased 19 per cent from 198.

As for Ombudsman cases, there were a total of 959 (355 new and 604

reopened or from 2012) and CCAC managed to solve or archive 510, which means 53.2 per cent of the total. However, in 2012 CCAC solved 563 cases of this kind, which means that there was a decrease of 9.6 per cent of solved cases in on-year time.

In total, due to cases from 2012 and other reopened cases through the year, CCAC had to handle a total of 1,523 cases. This is also an increase (19 per cent) in relation to 2012, when 1,279 cases were handled.

As for the 896 new cases received in 2013, some 815 (91 per cent) were considered pursuable, while the remaining 81 (9 per cent) were not considered appropriate for the Commission Against Corruption.

The citizens of Macau were the largest source of cases, accounting for 95.5 per cent (856) of the new cases through identified (54 per cent) and anonymous (41.5 per cent) complaints. Another of Macau’s public bodies reported 12 cases (1.3 per cent), while foreign authorities required assistance in 6 cases (0.7 per cent).

Meanwhile, the cases uncovered by CCAC accounted for 22 (2.5 per cent).

Business Daily | 3

December 5, 2014

Macau

It’s in the bank Macau’s ‘financial savings’ amounted to MOP393 billion in 2013, around 95 per cent of the territory’s GDP. What the government has in its coffers is more money than the size of 100 economies around the world. In 2014, another MOP100 billion is coming in Luís Gonçalves

luis.goncalves@macaubusinessdaily.com

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very personal finance advisor will tell you that it is good to have at least six months’ worth of your salary in the bank in order to protect you against headwinds like unemployment or other unexpected calamities. In the case of Macau, the government has not six but a full year of ‘salary’ in the bank. The territory could simply take a breather for a whole year without the need to borrow money.

The same personal finance advisor will call Macau an ultra cautious client. For most governments this would be a dream-like scenario: no public debt and enough cash to take a gap year.

According to the report of the Legislative Assembly (AL) on the 2013 budget execution rate, the government’s ‘financial savings’ last year amounted to MOP393.7 billion, a sum equal to 95 per cent of Macau’s Gross Domestic Product (GDP). The ‘financial savings’ are basically all the money that authorities have in its coffers, like the cash people have in a bank. For the government here it includes all the fiscal surpluses

that the Treasury and the Monetary Authority of Macau (AMCM) have accumulated.

While most countries struggle to reduce their public deficit, what Macau has in its deep pockets is more than 100 of the 187 countries tracked by the International Monetary Fund (IMF). Yes, Macau’s ‘savings’ are greater than the economies of Costa

70pct of workers never promoted, survey reveals Kam Leong

kamleong@macaubusinessdaily.com

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he latest survey on job mobility conducted by the Macau Management Association (MMA) shows that nearly 70 per cent of around 1,000 interviewed employees in the city say they have never been promoted.

The results of the survey, released on Wednesday evening, reveal that 68.4 per cent of the 1,013 surveyed have never been given the opportunity for career advancement. The situation is worse for those working in the gaming industry, marketing & public relations and local associations – where only 20 per cent of interviewees working in these fields said they had been promoted.

However, those working in MICE, government, banks and medical services may have more opportunities for advancement. More than 60 per cent of surveyed employees said they have been promoted. In the MICE industry alone, nearly 80 per cent of the interviewees said they had been promoted.

The Association perceives that the high promotion rate in the MICE industry suggests that the development room for new industries will be better than the traditional ones.

Meanwhile, the survey also found that 37.4 per cent of total interviewees

have been working for their current employers for less than three years, suggesting that the job turnover rate of Macau residents is quite high, the Association said.

In addition, 65.5 per cent of interviewees reckon that the current job conditions in Macau are not ideal, reflecting that Macau residents are not optimistic about job prospects despite the unemployment rate of Macau being virtually non-existent.

In fact, more than 30 per cent of those who work in advising, media and banks change their profession the following year, according to the survey.

Factors driving these employees to leave their jobs, according to the Association, are primarily remuneration and benefits, room for promotion, working hours and work pressure.

MMA also found that education and career planning do matter in promotion - more than 75.5 per cent of upper management has a university degree or above, while half the junior staff or management has a high school certificate or below. In addition, 48.3 per cent of junior staff claimed that they had not planned for their careers while over 70 per cent of professionals or upper management claimed that they had.

Rica, Slovenia, Tunisia, Nepal or Cambodia, to name but a few.

According to the AL report, the government money is spread in three main areas. The Treasury has MOP169 billion, AMCM has MOP54 billion to manage the city’s exchange currency and Macau’s financial

reserve the remaining MOP169 billion (also managed by AMCM).

The booming years of the gaming industry in Macau made the government richer than ever. In only four years, between 2010 and 2013, government ‘savings’ doubled. In 2010, they amounted to MOP153 billion, around 67 per cent of GDP, now they are almost MOP400 billion.

In only one year, from 2012 to 2013, Macau’s ‘financial savings’ increased

by MOP100 billion, the AL report says.

This year, despite the record drop in gaming revenues during the second half, the fiscal surplus could reach MOP100 billion, meaning an extra injection for the public finances into Macau. According to Financial Services Bureau data, the fiscal surplus this year until October amounted to MOP85 billion. With two months left to close the year – seeing how the November figures aren’t out yet – this sum could reach MOP100 billion. This means that Macau’s ‘financial savings’ could top almost MOP500 billion.

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December 5, 2014

Macau

Retail chain Toys ‘R’ Us mulls shop expansion

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Renowned toys retailer Toys ‘R’ Us, currently operating two stores here, is eyeing further expansion in the city

HOSPITALITY

Stephanie Lai

sw.lai@macaubusinessdaily.com

Short visits As the number of visitors to Macau rises, so does the number of both main types of visitor: those that stay overnight, and those that don’t. That is, what we usually call overnighters and same-day visitors, sometimes also identified in official statistics as tourists and excursionists. The number of same-day visitors has been rising faster than the number of overnighters, which is a somewhat undesirable development. The latter will, as a rule, spend more, make wider usage of the city facilities and retail services, and contribute less to congestion of roads and attractions. Last October provided another good example of these trends. The overall number of visitors grew by 10.9 per cent; the specific rates for overnighters and same-day visitors were 5.2 per cent and 15.9 per cent. October’s figures, compared with the same month last year, meant that 92 per cent of the additional visitors were same-day visitors. Similar features can be detected if we compare the figures for October 2012. This is a somewhat ingrained trend, which is proving difficult to invert.

Figures for most of 2012 suggested that the share of overnighters might at last rise sustainably. In three separate months, their number actually rose above that of same-day visitors. But those figures proved transient.

With most visitors coming from the mainland and staying for short periods of time only the number of land crossings has increased its dominance among the means of entry to Macau. They represent consistently more than half of all arrivals and their share seems to be rising slowly but steadily. This year to October, the corresponding share stood at 55.2 per cent, 1.2 percentage points above the value last year, and 2.4 percentage above the 2012 figure.

J.I.D.

12.4%

rise in same-day visitors, this year to October

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s toy retail chain store Toys ‘R’ Us, Inc has seen relatively rapid sales growth in the Greater China region, in particular in Hong Kong and Macau, the local retail arm of the renowned brand has announced plans for further store expansion in the city.

Macau Matters Co Ltd, established in July 2006, is a subsidiary of the ferry operation and property development conglomerate Shun Tak Holdings Ltd that runs the Toys ‘R’ Us stores here.

Following the opening of the first store in Macau Tower in 2006, which underwent an expansion in 2010 that saw the store space grow to 15,000 square feet, Toys ‘R’ Us oversaw the opening of a new store in late November. The new store, occupying 9,300 square feet is located on the third floor of Ginza Plaza, a

shopping mall located on Rua de Pedro Nolasco da Silva – the street just adjacent to the tourist shopping hot spot in S. Domingos district in downtown Macau.

Sales at the new store, which opened on November 22, have been performing “exceptionally well”, managing director of Toys ‘R’ Us, Southeast Asia and Greater China Andre Javes told Business Daily, without citing respective figures. Mr. Javes and Shun Tak’s representatives attended the official opening ceremony of the new store yesterday.

“We wouldn’t have opened a second store if we didn’t believe in the robustness of the Macau economy,” general manager of Macau Matters Ben Tang told us. “We’re working with Toys ‘R’ Us discussing plans on further expansion. It’s not finalised

yet but definitely there are plans in place . . . It’s acknowledged that we have one of the highest [sales] growth rates in the Greater China and Asia region,” Mr. Tang said, referring to the sales performance in Hong Kong and Macau.

The Ginza Plaza shopping mall, whose rival Sun Star City is situated right across the street, first opened in August 2010. However, the plaza has been experiencing high turnover of shop tenants and until now is still far from fully occupied by retail outlets inside the property, where the existing tenants are mostly locally branded fashion and accessories retailers.

The Macau Matters general manager admitted that the final decision to locate the new store in Ginza Plaza “is not ideal” but believed that it could attract higher foot traffic for both the store and the mall as a whole.

“The reason for opening a second store in this area is to make it more convenient for locals to shop, and for tourists as well,” Mr. Tang said.

“There’s a big tourist population around this area, and the tourists’ trade is actually now contributing significant growth to our store’s business. So it’s the right place to be.”

“Toys ‘R’ Us is a destination shopping place where people will come looking for it, so we don’t necessarily have to have ground floor location like, perhaps, a fashion retailer,” Mr. Tang added. “We do believe that by coming in here we will encourage other retailers, especially retailers that are going to target the same audience – young families, kids – to come into this centre.”

AL, gov’t to study auxiliary scheme for building management law

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he president of the third standing committee of the Legislative Assembly, Cheang Chi Keong, said the AL would communicate with legal advisors from the government on the auxiliary scheme for the law regulating building management, in order to resolve industry concerns that properties could be left vacant if managing companies do not hold

regular owners’ committee meetings.

The AL committee met with the Property Management Business Association yesterday, whereby the Association expressed its concerns about when such auxiliary scheme could be drafted as well as the relationship between wage costs and management fee once the minimum wage was implemented, according to Mr. Cheang.

Business Daily | 5

December 5, 2014

Macau WTCC drops December revenues to drop at Macau finale from least 26pct, says Credit Suisse next year’s calendar Tighter rules for transit visas and disruption from The World Touring Cars championship will not compete next year on the Guia race track, it was confirmed yesterday by championship organizer Eurosport Events. Instead, the TC 3 International Series will fill the vacuum

Xi Jinping’s visit will likely drive December gaming revenues down by almost 30 per cent. Casino stocks will suffer further blows this month, the Swiss bank warned yesterday Luís Gonçalves

luis.goncalves@macaubusinessdaily.com

João Santos Filipe

jsfilipe@macaubusinessdaily.com

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he Macau Grand Prix has been dropped by the World Touring Car Championship for next season, Eurosport Events confirmed yesterday. The news has been circulating in the paddock for some time but the official confirmation only surfaced yesterday, as next season’s calendar was revealed.

For the last decade, the Guia track has hosted the WTCC season finale but in 2015 Qatar will do the honours with a night race on the Losail circuit, the FIA World Motorsport Council has decided.

“As much as the Macau Grand Prix has helped the WTCC to get a first taste of racing in Asia, we now have a solid broadcast base in the region and a presence in China, Japan and now Thailand,” explained François Ribeiro, Eurosport Events’ Chief Operating Officer.

“We take this opportunity to thank the Macau Grand Prix organisers for having hosted us since 2005”.

“The WTCC has matured over its 10 years of existence and we have therefore decided to look for new alternatives in a new region that can open up new markets, better TV schedules and be closer to our home base, allowing the

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material to return quicker to Europe”, Ribeiro concluded.

WTCC will still race Asian rounds in Shanghai, Japan and Thailand as well as Qatar.

Meanwhile, the Macau Grand Prix Committee is closing in on an agreement with the newly created Touring Car 3 International Series, as during this year’s racing weekend some teams told Business Daily that Macau would host a TC3 race in 2015.

There are other signs that TC3 will race in Macau. So far, the provisional calendar of the series has 12 races, five to be raced in Asia, five in Europe and two in America. All race locales are known save for the championship finale, which has yet to be announced.

However according to the organisation the last race of the championship will take place in Asia, during November, which is the traditional time of the Macau Grand Prix.

This notwithstanding, the official announcement should take some time as last Monday João Costa Antunes, the Coordinator of the Grand Prix Committee, told Business Daily that there should be some months until there was news about next year’s Grand Prix.

t’s by far the most pessimistic estimation for December until now.

Credit Suisse predicts that gaming revenues in Macau could decline almost 30 per cent this month. The Swiss bank points out that tighter rules for transit visas and travel disruption caused by Xi Jinping’s visit here will probably keep gamblers away from Macau.

In a note to clients, Credit Suisse says the revenue trend for the coming weeks ‘could be disappointing’. For now, the bank’s estimation predicts a 26 per cent decrease in revenues in December yearon-year but with a ‘downside risk’, meaning analysts are anticipating a further decline.

Credit Suisse says it talked recently to several members of the industry here ranging from operators to junkets to premium mass marketing hosts, who ‘in general find it challenging to get players visiting Macau in the coming few weeks’. Two main reasons are driving the December decline, according to these industry sources. First, the tighter transit visa rule – ‘the players fear the record keeping at Zhuhai border gate on stricter travel documents inspection’. Second, less and tighter visa approvals around the time President Xi Jinping visits this month.

China’s stern new policy may benefit Ho’s Russian casino venture

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n addition to the antigraft campaign of the Central Government, the authorities in China have decided to tighten the restrictions on mainlanders entering Macau as a means of transit from December.

Taiwanese media said the two policies will benefit local casino developer Lawrence Ho Yau Lung’s casino project in Russia which is slated to open in the second quarter of the year.

Taiwan’s Chineselanguage newspaper China Times claimed that junket operators in Macau are bringing the VIP gamblers

out of the SAR to casinos in the Philippines, Vietnam, Singapore and South Korea, where gaming taxes on average are considerably lower than in Macau. In particular, it noted that the gaming tax in Vladivostok in Russia, where Mr. Ho’s new project will be located, is only one per cent.

Mr. Ho’s Russian casino project is primarily invested in by the two companies he controls, Summit Ascent and Melco International, as well as a Taiwanese gaming supplier Firich Enterprises Co Ltd, which has bought 19 percent

stake of the project.

The news outlet indicated that the year-on-year growth of 41 per cent of the gaming revenue in Korea is due to Macau VIP gamblers shifting to the Eastern Asia country. Although the Korean Government prohibits its citizens from entering their own casinos, Koreans as well as Mainland people from the northeast regions can travel to the Russian city by car or direct flight, which the newspaper perceives more VIP gamblers from Macau will be inclined to do.

K.L.

These additional factors will probably divert a lot of players and tourists from Macau, with some not coming at all and others postponing their visit.

Stock crisis If there’s any doubt about the material evidence of one of these factors, Credit Suisse said that just after the new rules for transit visas at the Zhuhai border gate were announced, Macau gaming stocks suffered a decline of 2 to 6 per cent with investors expecting the enforcement to reduce the number of players arriving to play at the city’s gaming tables.

The disruption with President Xi Jinping’s presence in Macau was already one of the main factors driving revenues down in December, according to several investors. Despite being less pessimistic than Credit Suisse, the market is assuming a very weak

December for the Big Six here. Wells Fargo decided to revise down its estimations for the month from an 18 per cent drop to a 22 per cent decline year-on-year.

Deutsche Bank expects casino revenues to go down 21.2 per cent, with the VIP segment falling 31.3 per cent and mass 6 per cent, including slots.

Credit Suisse warned its clients that despite gaming stocks from operators in Macau already dropping 8 to 18 per cent since November 5, new declines are expected as the bank maintains its ‘cautious view on the sector short run’. The shares will be negatively pressured by ‘upcoming disappointing December revenues, potential margin deterioration in 4Q14 not yet recognised by the market (more earnings downgrade may follow) and potential dividend payout cut on weakened result and entering into the heavy capex cycle into 2015’.

6 | Business Daily

December 5, 2014

Macau

CTM ready to face competition The city’s biggest telecom operator, CTM’s monopoly in providing fixed-line services has ended with MTEL’s entry into the market; nevertheless, it has landed a three-year contract with the government to provide free public Internet service WiFi Go Joanne Kuai

joannekuai@macaubusinessdaily.com

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elecommunications operator Companhia de Telecomunicações de Macau SARL (CTM) has lost 33 percent of its fixed-line business since MTEL started operations earlier this week.

But CTM did pick up a more than MOP20million contract with the government for the provision of the free public Internet service WiFi Go. The telecom operator is ready to face competition in the fixedline market, as well as providing fourth-generation (4G) standard mobile services, said Ebel Cham Pou I, the company’s vice president of commercial on the sidelines of the opening ceremony of a new shop.

“We’ve constantly tried to enhance our quality in customer service and network,” said Ms. Cham. “Market competition helps improve market environment. The customers have more choices [which] benefits the whole market”.

CTM’s monopoly in providing the local fixed-line services ended after

MTEL Telecommunication Company Ltd started offering land-line lease services, following the company’s first-phase completion of network coverage of around 33 per cent of

households across the Macau SAR. The Telecommunication Regulation Bureau announced recently that CTM had won the tender to provide the 3-year free wireless

THERE ARE THINGS WE DON’T DO BUT WE DO • Advertising • Branding & marketing consulting • Marketing strategy • Creativity • Design

Internet service over fellow bidder Centro de Informações Tecnologia de Macau (CITM).

Currently, the city covers 147 hotspots with the WiFi Go service, such as the Outer Harbour Ferry Terminal, the Border Gate and government departments and public spaces.

In 2010, five companies bid for WiFi Go when the Bureau first launched the free Internet service.

The telecommunication regulator also said recently that the new operator has to add 20-plus hotspots for WiFi Go, comprising public spaces as well as tourist attractions, and will raise the current 147 free access points to 167 with the aim of providing 250 hotspots by 2017.

The territory’s largest operator also opened a new store in Iao Han district yesterday. The old store, which is about a hundred metres down the same road, will be in service until 25 December. During this period, no regular service will be provided by the former store save for the promotional sales of some gadgets.

“With the large population in Iao Hon district and increasing demand by residents on telecom services, the company envisaged that the opening of a new Iao Hon store will be able to better serve the needs of customers to cope with the development of the district,” said Vandy Poon Fuk Hei, chief executive of CTM. The new CTM Iao Hon store currently has nine regular counters and one mobile counter. It provides product sales, service subscription, general enquiries, data transfer service and features the no.1 Club Priority counter. Operating hours are between 10:30am and 8:00pm Monday to Sunday.

There are men and women who give human kind their perseverance, their genius, their generosity and, in some cases, their own life.

Those people and their actions are our inspiration.

•••

info@goldfishmacau.com +853 2833 1258

Business Daily | 7

December 5, 2014

Macau

Hollywood bows to Chinese censors while courting investors Some studios are making changes to cater to local tastes, and Fosun International says it will ‘exercise significant influence’ over distribution arrangements in Macau, Hong Kong, the mainland and Taiwan

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ollywood film studios are courting Chinese investors to gain access to the world’s most populous nation, brushing aside concerns that their new partners will seek to censor the next generation of films and TV shows.

In the latest sign of the growing mutual interest, Dalian Wanda Group Co said it’s in talks to acquire a stake in Lions Gate Entertainment Corp, maker of “The Hunger Games” films.

Alibaba Group Holding Ltd Chairman Jack Ma toured Hollywood in October seeking alliances, while Shanghaibased Fosun International Ltd invested in Jeff Robinov’s Studio 8, which is making films for Sony Corp.

Hollywood is seeking Chinese investors despite the country’s routine censorship of films and TV shows. Studios from Walt Disney Co to Metro-Goldwyn-Mayer Inc have changed story lines, altered national identities and removed sex scenes to accommodate government oversight.

Hollywood has even partnered with the Chinese government-owned companies on movies like “Kung Fu Panda 3,” from DreamWorks Animation SKG Inc. “Every mainstream studio is keenly aware of not offending the Chinese market, because it’s become such an important revenue stream,” said Tom Nunan, a visiting professor at the University of California at Los Angeles School of Theater, Film and Television.

Wanda is interested in buying control of Lions Gate, though the studio, run from Santa Monica, California, is only willing to sell a

minority stake, Wanda Chairman Wang Jianlin said in an interview.

Soft power A deal would likely bring a payout to Lions Gate investors including Chairman Mark Rachesky, owner of a 37 percent stake, after the shares more than quadrupled since the start of 2012. Lions Gate rose 3 percent to $34.90 yesterday in New York.

The expansion of entertainment companies like Wanda fits into President Xi Jinping’s push to increase China’s “soft power” by promoting homegrown content and the Chinese language.

Every mainstream studio is keenly aware of not offending the Chinese market, because it’s become such an important revenue stream Tom Nunan, UCLA visiting professor

“He has really put forward a new vision for China’s place in the world,” said Robert Cain, president of Pacific Bridge Pictures and an entertainment industry consultant.

Last year, Wanda announced the construction of the world’s biggest film studio in the eastern port of Qingdao, part of an $8 billion complex that will include 20 studios, a yacht club, movie theater, hotels and a wax museum. The project will help Wanda create a Chinese cultural brand, the state-run Xinhua News Agency reported at the time.

Gov’t censorship China, the largest film market after the U.S., is also among the fastest growing, according to the Motion Picture Association of America, making it the single most important opportunity for Hollywood studios to expand.

The Chinese box office grew 27 percent to US$3.6 billion last year, while U.S. ticket sales rose 1 percent to US$10.9 billion, according to the Motion Picture Association of America. As China looks to grow its creative industries under its latest fiveyear industrial plan, it is improving copyright protection.

At the same time, Xi has overseen tighter controls over the world’s largest Internet audience and urged artists to produce works of moral, rather than commercial value. At home, Wanda works under strict censorship on what films it can produce or show in its theatres.

Local tastes To appease Chinese censors, and sometimes cater to local tastes, studios are making changes. Disney, based

in Burbank, California, offered a separate version of 2013’s “Iron Man 3” with Chinese actors and bonus footage. It totalled US$121.2 million in ticket sales in the market.

For the remake of “Red Dawn” in 2012, MGM changed the enemy army to North Korean from Chinese, the Los Angeles Times reported then.

“Cloud Atlas,” the Warner Bros. film also released in 2012, had almost 40 minutes cut for the Chinese version, with sex scenes omitted, the Hollywood Reporter said at the time.

At Studio 8, Robinov has greenlight authority over the films made, which will target a global audience, according to a company statement.

As part of the agreement, Sony has also invested in the studio, according to the statement. Fosun will “exercise significant influence’ over distribution arrangements in China, Hong Kong, Macau and Taiwan, American entertainment companies are also investing in China.

DreamWorks Animation, based in Glendale, California, formed a partnership, Oriental DreamWorks, in 2012 with state-owned Shanghai Media Group, China Media Capital and Shanghai Alliance Investment Ltd. Oriental DreamWorks is producing ‘‘Kung Fu Panda 3,’’ scheduled for release in 2016, and is building an entertainment centre in Shanghai for live performances.

Theme parks Disney plans to open a theme park in Shanghai next year, while Comcast Corp.’s Universal Studios plans to invest 20 billion yuan to construct a park in Beijing, the company said on Oct. 14.

The international box office is now more than twice as large as the domestic market of U.S. and Canada.

That’s encouraged studios to focus on fare that targets as broad an audience as possible, such as superhero films.

Those films are easier to conform to Chinese tastes, said Nunan, the UCLA professor, who was a producer of the Oscar-winning film ‘‘Crash.”

“When it comes to superhero movies that’s really not that difficult,” Nunan said.

Bloomberg

8 | Business Daily

December 5, 2014

Greater China Attracting more social funds for energy China aims to lower the market threshold and absorb more social capital for state grid, pipelines, clean energy and mineral resources projects, the country’s top economic planner announced yesterday.

The decision is a part of the move to fully mobilize social investment and maintain the pivotal role of investment in stabilizing economic growth, said Li Pumin, spokesman with the National Development and Reform Commission (NDRC). The NDRC has given out similar urges in the sectors including food, water, transport, environmental protection and elder care last week.

Brick-and-motar stores remain firm By the end of this year, China will have more than 880 urban commercial complexes, an increase of 24.47 percent from last year, China Daily reported yesterday. That number is expected to jump to 1,200 by 2018, according to the newspaper, citing the latest estimates from Knight Frank, a global real estate consultancy and services provider. The combined floor space of all commercial shopping complexes in China will be 430 million square meters by 2016, the equivalent space of 1,800 Bird’s Nest stadiums, the news paper reported.

Wealth management in domestic market China will allow wealth management products sold by its commercial banks to enter the domestic bond and stock markets, in a move to encourage direct investment through these products instead of through trust companies, two sources with knowledge of the upcoming changes told Reuters yesterday. The banking regulatory commission also asked banks to set aside funds to guard against potential risks, a banker and a source close to the regulator said. China’s shadow banking sector continued to grow at breakneck speed in 2013 and now ranks as the third largest in the world.

100 million ‘outbound trips’ this year Chinese travellers have taken 100 million “outbound” trips this year, officials said, with the vast majority visiting Hong Kong, Macau and Taiwan. Just under four percent of the 100 million trips counted up to the end of November were to Europe, China’s state tourism administration said Wednesday, while 90 percent were within Asia. Although Beijing considers self-governing Taiwan as part of China along with Hong Kong and Macau, the tourism administration said that nearly 71 percent of “outbound” trips were to the three territories.

Grain output rises for 11th year China’s Grain output rose 0.9 percent from last year, reaching 607.1 million tonnes in 2014, according to data released on Thursday by the National Bureau of Statistics (NBS). The latest figure marked grain output growth for the 11th year in a row since 2004. The 0.9-percent growth followed a 2.1-percent rise registered in 2013, when total grain production amounted to 601.94 million tonnes.

Hou Rui, a senior NBS statistician, said that stable government policies toward agriculture, effective enforcement of policies and measures as well as technology contributed to the rise.

Coal producers try to boost prices for 2015 contracts Talks kicked off last weekend in the coal heartland of Shaanxi province Fayen Wong

C

hinese coal miners are raising spot prices in a domestic market struggling to recover from seven-year lows, desperate for an edge in annual negotiations to supply power plants, key buyers in the world’s biggest consumer of coal, industry sources say.

Discussions on annual contracts for 2015 are being closely watched abroad as any sustained climb in benchmark prices for Chinese steam coal could reignite import demand, after Beijing imposed a 3-6 percent tax on overseas supplies in October.

And with nearly 70 percent of China’s miners making losses, failure by producers to secure a better term price could push some mid-sized and higher-cost miners out of business, posing a threat to the economic health of coal-dependent regions.

The benchmark price for Chinese steam coal with a heating value of 5,500 Kcal/kg stood at 521 yuan (US$85) this week, with measures including the introduction of import tariffs dragging it up around 8 percent from lows plumbed in August.

But that is still down by nearly a

KEY POINTS Industry sources say miners have pushed up their spot prices Hope for advantage in term contract talks with utilities Energy companies have bulging coal stockpiles

fifth from the start of the year, with miners’ earnings halved in the first 10 months of 2014 from last year.

“If prices return to 550 yuan, there could be room for Australian imports to flow into China again,” said Thomas Deng, an analyst at consulting firm ICIS-C1 Energy in Beijing.

But industry experts say that swollen stockpiles and tepid demand will give utilities strong bargaining

Intel to invest in China factory The announcement comes three months after Intel purchased a minority stake in a government-controlled semiconductor company to jointly design and distribute mobile chips

I

ntel Corp will invest US$1.6 billion to upgrade its factory in the city of Chengdu in western China, the latest sign of how the chipmaker is deepening ties in a market that is proving increasingly troublesome for some U.S. technology peers.

As part of the upgrade, Intel said in a statement yesterday it would bring its most advanced chip-testing technology to China. In exchange it will receive local and regional government support for construction.

“Deploying our newest advanced testing technology in China shows our commitment to innovating jointly with China,” Intel executive vice president William Holt said in the statement. “The fully upgraded Chengdu plant will help the Chinese semiconductor industry and boost regional economic growth.”

The announcement comes three months after Intel purchased a minority stake in a governmentcontrolled semiconductor company to jointly design and distribute mobile chips, an industry that China considers to be of strategic importance.

Intel’s fortunes in China contrast

with the travails of its rival, Qualcomm Inc., which is expected to announce in the coming days a potentially recordbreaking settlement with Chinese antitrust regulators.

China’s investigation into San Diego-based Qualcomm, as well as a spate of recent probes against firms including Microsoft Corp, have prompted an outcry from foreign business lobbies. They say the Chinese government is increasingly adopting strong-arm tactics to yield technologysharing or other arrangements beneficial to domestic industry.

The government, meanwhile, has defended its regulatory scrutiny as even-handed. It has pointed to a history of Qualcomm and Microsoft facing similar antitrust probes in Western countries.

Analysts say there is a broad recognition that foreign companies must do more to stay in China’s good graces.

“Intel’s taking the approach that’s appreciated by the Chinese government,” Nomura analyst Leping Huang said.

Reuters

power in negotiations, adding that benchmark prices could drop again next year as more production capacity comes online.

“Current (benchmark) prices are not sustainable and could easily fall back to 500 yuan next year. Buyers know that so they don’t want to commit,” said Zhang Yuan, a coal analyst at Galaxy Futures.

The sources said top miner

Business Daily | 9

December 5, 2014

Greater China Shenhua Coal has raised prices by 50 yuan since September to 539 yuan per tonne. Companies sometimes demand prices above the benchmark in hope of driving the market higher.

After increasing their spot prices in recent months, top producers - Shenhua, China National Coal Group, Datong Coal Mine Group and Inner Mongolia Yitai Group - have suggested a 2015 contract price of 510-520 yuan, said sources at two major utilities. Term prices between Shenhua and top utilities were set at about 570 yuan for 2014.

The sources declined to be identified due to the sensitivity of the matter. The four miners did not respond to requests for comment.

China considering merger of top state nuclear firms Xu confirmed that SASAC is also reviewing another merger involving SNPTC and one of the country’s big five state electricity generators

Plenty of stock The National Development and Reform Commission, the country’s powerful economic planner, has also intervened, suggesting large utility groups agree to a 2015 term price of 550 yuan a tonne and urging multiyear contracts, the sources said.

“That is an unreasonable number, everyone knows the market is way oversupplied. We have plenty of stock and we will bide our time,” said the first utility source, a procurement manager at China Datang Group.

Run rates at coastal thermal plants are hovering at 55-60 percent, according to data from SXCOAL.com.

Coal stocks at key power plants struck a record of 98 million tonnes in November, equivalent to 33 days of consumption.

“At current run rates, we’ll need to cut term contract volume by about 10 percent. Even if the economy picks up, miners still have plenty of inventory,” said the source at a second utility.

Reuters

C

hina is considering proposals to merge its two biggest nuclear power firms as it bids to compete to build reactors overseas, three industry officials familiar with the situation told Reuters on Thursday.

Plans have already been submitted to the State-Owned Assets Supervision and Administration Commission (SASAC) to merge the China National Nuclear Corporation (CNNC) with the China General Nuclear Power Corporation (CGN), said Xu Lianyi,

a former government official and industry consultant.

The two companies were deliberately set up as rivals to compete for projects at home and overseas. But under government prompting, they have cooperated on a single reactor brand, Hualong I, with the intention of eventually marketing it abroad.

“The merger between CGN and CNNC is inevitable,” said Xu, speaking on the side-lines of an industry conference in Beijing.

He added that the proposals had received strong backing from the central government.

Xu now serves as a senior expert at the State Nuclear Power Technology Corp (SNPTC), a firm entrusted with building and developing “third-generation” nuclear technology, including the U.S.-based Westinghouse’s AP1000 reactor.

Xu confirmed that SASAC is also reviewing another merger involving SNPTC and one of the country’s big five state electricity generators, China Power Investment (CPI).

Officials with SASAC and CNNC said they were not aware of the merger when contacted by Reuters. CGN was not immediately available for comment.

CNNC was hived off from China’s now defunct nuclear ministry and has strong ties with the military and the government.

CGN, formerly known as China Guangdong Nuclear, is the state-owned parent of CGN Power, which raised US$3.2 billion in an initial public offering in Hong Kong this week.

Last year, CNNC and CGN made a joint bid to take a stake of up to 40 percent in a reactor project at Britain’s Hinkley Point.

The first Hualong I reactor is expected to be approved for construction soon, with local media reports saying it would be built in the southeast province of Fujian.

Two other nuclear company officials confirmed the merger proposals to Reuters yesterday, with one saying that it was “ridiculous” that the firms should be competing with one another for overseas reactor projects.

They said that the two firms were looking to pool their resources and improve their ability to compete overseas.

Reuters

10 | Business Daily

December 5, 2014

Asia KEY POINTS Retail sales +0.4 pct in Oct, with Sept best two months all year Trade deficit shrinks by more than expected to A$1.3 bln Better data a relief after disappointing growth news

Australians defy income fears and keep shopping The resilience of discretionary demand suggested rising household wealth was giving consumers the wherewithal to keep spending in the face of sluggish wage growth Wayne Cole

A

ustralian shoppers kept spending in October to help retail sales notch up the best two-month performance this year, a hopeful sign consumers were weathering a slowing economy and falling incomes.

Yesterday’s data from the Australian Bureau of Statistics also

showed the country’s trade deficit shrank by more than expected in October thanks to a bounce in exports. Shipments to China surged 27 percent in original terms compared to September even as prices for Australia’s resources took a beating.

The upbeat news came as a relief after figures out on Wednesday

showed the economy grew just 0.3 percent in the third quarter, less than half the pace analysts expected and the smallest increase since early 2013.

Retail sales rose 0.4 percent in October, handily outpacing forecasts for a flat outcome, while September was revised up even further to show a jump of 1.3 percent.

The gains were also broad-based with household goods, clothing and department store sales up between 1.1 and 2.0 percent in October. Brisk activity in the housing market seemed to be feeding through to demand for household goods with sales up almost 6 percent over September and October combined.

While a rush for Apple’s new smartphone had helped boost sales in September, there was surprisingly no payback in October. As a result, sales of electronic goods jumped 11 percent over the two months for the biggest gain since 2002.

Nevertheless, financial markets continued to wager that the Reserve Bank of Australia (RBA) would have to cut interest rates from an already record low of 2.5 percent.

Recent steep falls in prices for some of Australia’s major commodities and a still stubbornly high local currency, has led investors to almost fully price in an easing to 2.25 percent by August next year.

Yet yesterday’s numbers showed Australia’s trade position was far from disastrous. The country’s trade deficit narrowed to A$1.32 billion (US$1.1 billion) in October, from A$2.23 billion the month before and well under forecasts of A$1.9 billion.

Exports rose 1.5 percent in the month led by metals and coal, while imports fell by 1.7 percent due mainly to drops in oil and motor vehicles.

Reuters

S.Korea GDP data underscores growing deflationary pressure The Bank of Korea blamed falling prices for export goods, such as electronics goods Christine Kim and Choonsik Yoo

S

outh Korea’s central bank released data showing rising deflationary risks, though it stuck by its earlier estimate that the economy grew 0.9 percent in the third quarter from the previous quarter, on a seasonally adjusted basis.

Analysts said that while Asia’s fourth largest economy does not face an imminent threat of deflation, deflationary pressures were increasing, even after excluding external factors such as falling energy prices.

Some advocated that the central bank ease monetary policy more aggressively.

The third quarter performance was an improvement on the second quarter, when the economy grew 0.5 percent in the second quarter.

But, more worryingly the data showed the gross domestic product deflator for the July-September period - the broadest measure of prices for all newly produced goods and services - stood steady for a second consecutive quarter.

“Deflation risks are clearly growing in South Korea, with wages and income remaining almost stalled,” said Young Sun Kwon, economist at Nomura

in Hong Kong.

The Bank of Korea blamed falling prices for export goods, such as electronics goods, but its data showed annual growth in the GDP deflator for domestic-demand items also slowed to 0.7 percent in the third quarter from 0.9 percent in the second quarter.

The annual GDP deflator growth for domesticdemand items has been below 1 percent for the past six consecutive quarters, the worst showing on record tracing back to the first quarter of 2001.

Kwon expects the Bank

Prime Minister Park Geun-hye addressing the Parliament

of Korea to follow up on two interest rate cuts earlier this year with a reduction in January, and another in April. But, he also said he

would not be surprised if the central bank lowers its policy rate at its review on December 11.

Reuters

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Asia

BOJ’s Sato warns inflation may stall until mid-next year He added that the BOJ shouldn’t act in response to monthly fluctuations in consumer prices Leika Kihara

B

ank of Japan board member Takehiro Sato said consumer inflation may stall until around the middle of next year due to slumping oil prices, underscoring the stiff challenge the central bank faces in meeting its ambitious price target.

The former market economist also signalled discontent over Prime Minister Shinzo Abe’s decision to delay a second sales tax hike initially planned for next year, warning that there was little the BOJ can do if investors sell bonds en masse on the view the country was losing control over its finances.

“It’s markets, not the government or the BOJ, that determines whether Japan is abiding by its commitment to fiscal consolidation,” he told business leaders in Kochi, western Japan yesterday.

The BOJ stunned markets by expanding stimulus in October to prevent sliding oil prices and weak domestic demand from delaying achievement of its 2 percent inflation target.

But market players doubt whether the BOJ can hit the target during the next fiscal year from April 2015, as the central bank predicts, with the economy having slipped into recession in the third quarter and companies remaining hesitant to raise wages.

Sato, who voted against easing in

Indonesia c/a deficit down Indonesia’s current account deficit is expected to fall below 3 percent of gross domestic product this year due to a sharp drop in global oil markets and last month’s hike in domestic subsidised fuel prices, a central bank official said. Bank Indonesia Deputy Governor Hendar told reporters yesterday that the current account deficit narrows by around US$170 million for every US$1 drop in global oil prices. The current account deficit in the third quarter narrowed sharply to 3.07 percent of GDP, compared with 4.07 percent in the previous quarter.

Malaysia’s exports decreasing

Bank of Japan headquarters

October, acknowledged that consumer inflation may remain stagnant until around the middle of next year due to sliding oil prices and the prolonged pain from a first sales tax hike in April.

But he added that the BOJ shouldn’t act in response to monthly fluctuations in consumer prices, repeating his longheld view that its price target should be considered a flexible one with room for some allowances.

“Prices reflect the state of the economy and are not a variable that can be directly controlled by a central bank,” Sato said. That is contrary to Governor Haruhiko Kuroda’s view that the BOJ ought to and can hit its

price target next year.

Sato has been sceptical of setting a timeframe for meeting the BOJ’s price goal ever since it adopted its quantitative and qualitative easing (QQE) in April last year. He was among those who dissented to the BOJ’s tight-vote decision on October 31 to expand stimulus.

Sato’s view was that the fresh easing in October wasn’t necessary because the economy and prices were showing improvements. He also said the effect of expanding QQE has diminished with interest rates already at historically low levels.

Malaysia’s export demand in 2014 fell from a high of 18.6 percent in April to as low as 2 percent in September, according to a local research institute.

Due to the decrease of exports, the subdued external outlook reduced trade surplus to a low of 3.6 billion ringgit (about US$1.12 billion) in July, down from the previous peak of 10.4 billion ringgit (about US$3.25 billion) in February, said a report issued by the country’s Alliance Research House on Wednesday.

Universal Terminal postpones IPO - IFR

End of the road for Delhi’s old bangers

Singapore’s company has postponed its up to S$1 billion (US$762 million) business trust initial public offering of oil storage terminals due to uncertain market conditions, IFR reported.

Listing is now targeted for before the Chinese new year in February, a source close to the deal said, IFR reported. “The company is monitoring the market conditions,” the source said, according to IFR. Books were to originally open on December 4 and listing was targeted for December 18.

Universal Terminal did not immediately respond to a Reuters email seeking comment.

Vehicular emissions are the cause of close to three-quarters of Delhi’s air pollution

Oil prices impact Santos

Reuters

Tommy Wilkes

A

n Indian court has banned all vehicles older than 15 years from the streets of the capital, New Delhi, in a bid to clean up air that one prominent study this year found to be the world’s dirtiest.

The ruling hits up to a third of the 8.4 million motorbikes, trucks, cars and auto-rickshaws that ply the traffic-choked roads of Delhi and its surrounding areas, transport officials estimate.

Cities across the world are ordering older vehicles off the road or restricting private car use to tackle growing air pollution. Mexico City introduced a ban on older vehicles driving on Saturdays this year, while in March, France briefly enforced the most drastic traffic curbs in 20 years.

“It is undisputed and in fact unquestionable that the air pollution of ... Delhi is getting worse with each passing day,” the National Green Tribunal ruled in a judgment last week banning older vehicles from city streets.

Vehicular emissions are the cause of close to three-quarters of Delhi’s

Traffic flow in Delhi is a critical problem

air pollution, the Delhi government estimates, and a World Health Organization study of 1,600 cities released in May found India’s capital had the world’s dirtiest air. India rejected the report.

The ban in Delhi lacks incentives to encourage drivers to trade in their older vehicles but eventually could boost sales for carmakers like Maruti

Suzuki India and Tata Motors, as the capital accounts for 17 percent of India’s new car sales, said IHS automotive analyst Puneet Gupta.

In Russia, sales of the Lada car have grown thanks in part to a state scheme that provides cash incentives to buy new cars if people sell their old ones for scrap.

Critics of the Delhi ruling say it is largely unenforceable, and will do little to tackle pollution in a city where 1,500 new vehicles roll onto the roads every day.

“Polluting vehicles occur in all different vintages, not just older cars,” said Anumita Roychowdhury at the Delhi-based Centre for Science and Environment.

She said authorities should introduce testing of vehicles for pollution levels, and raise taxes on more polluting vehicles to discourage their use.

“You really need to scale up public transport and you need to reduce the overall volume of vehicles on the road,” she said.

Reuters

Australian oil and gas producer Santos Ltd scrapped plans to raise 1 billion euros after plunging oil prices pushed up potential borrowing costs, and said it will focus instead on cutting costs, knocking its shares to a near 10-year low. The company said yesterday its plan to tap investors through an issue of euro hybrids had been designed to give it flexibility, and was not due to any shortage of cash, however analysts said Santos was the most vulnerable of Australia’s oil and gas producers to plunging oil prices.

Myanmar to be top touristic spot Myanmar is predicted by Skyscanner to rank first in the list of top-10 tourist destinations for 2015, a semi-official media yesterday. The travel search firm forecast Myanmar as next year’s hottest destination based on its data which revealed a 59 percent increase in flight search for the country, said the Global New Light of Myanmar.

Following Myanmar on its top-10 destination list are Greece, Iceland, Brazil, Panama, New Caledonia, South Korea, Sri Lanka, Nicaragua and Japan.

12 | Business Daily

December 5, 2014

Asia

Mitsui sees derivatives boost The company’s strategy is the result of recent oil price evolution

are highly volatile. Kawashima declined to say how many clients Mitsui currently has.

Creates opportunity The company’s push comes as it consolidates two derivatives units into a single firm, to help cut costs as financial regulation increases, said Kawashima. Expenses incurred due to additional rules and oversight has priced many parties out of the business, he said.

Some of the world’s top banks are scaling back their commodities operations. Deutsche Bank AG last month became the latest, exiting physical trading of precious metals.

This creates an opportunity for trading houses such as Tokyo-based Mitsui, according to Kawashima.

Traders invest in assets like mines and oil fields, and buy and sell the commodities they produce, leaving them with a greater awareness of the needs of clients like mining and oil companies, he said.

The company’s biggest expansion recently has been in coal derivatives, Kawashima said, a market that has fallen in tandem with steel prices.

“The time of the commodity supercycle, when you could sell everything that you made, is over,” Kawashima said.

Mitsui, which earns almost 90 percent of its net income from mining and trading oil, gas, iron ore, coal and other commodities, also plans to act as a risk consultant to clients and not just as a broker for their trades, Kawashima said. Within Asia, Thailand, Malaysia, South Korea and China are growing markets for commodity derivatives, he said.

Mitsui employs about 200 people at its commodity derivatives businesses worldwide, with offices in London, New York, Singapore and Tokyo.

Yuriy Humber and Ichiro Suzuki

M

itsui & Co. wants to boost its number of clients for commodity derivatives by 30 percent within three years, as swings in the price of oil and metals push producers and manufacturers to hedge their risk.

Volatile prices for raw materials, spurred by a plunge in the oil market, has more than doubled demand for Mitsui’s derivatives contracts since August, Toshihiro Kawashima, head of commodity trading and risk management, said in an interview in Tokyo yesterday. Mitsui is now focused on expanding in Asia-Pacific and Latin America as client anxiety over price volatility rises, he said.

Crude oil in the last six years has traded as high as US$145 a barrel and as low as US$34 a barrel in New York.

It fell into a bear market in November, whipsawing other commodities such as gold, whose volatility has surged to the highest in nine months. Oil’s slide has accelerated since OPEC decided last month to maintain output in the face of a supply glut.

The number of commodity futures and options contracts traded globally in the three months to October are both up 13 percent from a year earlier, according to data on the website of the World Federation of Exchanges.

Derivative contracts such as futures and options allow buyers and sellers to lock in the future price of a commodity to ease planning and smooth cash flows even when markets

Bloomberg News

Samsung mobile executives to leave after profit slide-source Samsung Electronics is expected to announce its annual business reorganisation plan by next week Se Young Lee

T

hree deputies to the head of Samsung Electronics Co Ltd.’s mobile division are leaving, a person with knowledge of the matter said yesterday, as the world’s largest smartphone maker faces a rapid decline in profit.

The person, who declined to be named due to the sensitivity of the matter, said the executives directly report to division chief J.K. Shin, who this week retained his post despite sagging smartphone sales and expectations the company will see its worst annual profit in three years in 2014.

The departures included global marketing chief D.J. Lee, the source said, confirming earlier media reports.

Samsung Electronics declined to say if any executives were leaving the company as it announced its annual reshuffle for executive-level staff.

But the announcement showed Samsung had made 165 executivelevel promotions, the lowest number in at least four years, underscoring the strains the South Korean company is under.

“Shin was given another chance, given his past contributions, but he will definitely continue to feel the pressure going forward,” said IBK Securities analyst Lee Seung-woo ahead of Samsung Electronics’ staff announcement.

Samsung’s share of the smartphone market has fallen year-on-year for

KEY POINTS Three deputies to mobile chief leaving - source Samsung facing worst annual profit in three years Local media say 25 pct of mobile business execs are out

the last three quarters, squeezed by Chinese rivals like Xiaomi Technology Co Ltd at the low-end and Apple Inc’s iPhones in the premium segment.

The company has kept mum about the details but the Joongang Ilbo newspaper reported earlier that Samsung will reduce executivelevel positions for its mobile communications business by 25 percent. Other media reported the company could hive off its medical equipment business.

Samsung earlier this week said it will sell its fibre optics business to U.S. speciality glass maker Corning Inc., its second exit from a non-core business this quarter.

Reuters

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Business Daily | 13

December 5, 2014

Asia

Petronas delays go-ahead for Canadian LNG project

Cambodian PM to visit South Korea

A Canadian federal review of the terminal is still underway, with a decision not expected until mid-2015 at the earliest Julie Gordon

P

etronas, Malaysia’s state-owned oil and gas company, delayed giving the final go-ahead for its planned investment in a US$11 billion liquefied natural gas export terminal in British Columbia, citing high costs and other outstanding issues.

Petronas had hoped to be in a position to green light its Pacific NorthWest LNG project before the end of 2014, but said it still needs more clarity on “substantive items of importance” and is reviewing the impact of declining oil prices on the economic viability of the remote development.

The company warned back in October that the economics of the project, part of a roughly US$35 billion investment in Canadian gas, were marginal and said it could delay an investment by up to 15 years if outstanding issues around taxation, regulation and costs were not resolved.

British Columbia has since

finalized its LNG tax package and approved both the terminal and pipeline, but a federal review of the terminal is still underway, with a decision not expected until mid-2015 at the earliest.

And last week, Chief Executive Shamsul Azhar Abbas said that while an investment decision was 75 percent complete, talks with contractors were on-going and that bids were still not as good as expected. He also warned low oil prices could lead the company

SoftBank invests in taxi-hailing app GrabTaxi The app competes with Rocket Internet’s Easy Taxi as well as Uber’s better known app Aradhana Aravindan

J

apanese telecoms firm SoftBank Corp has pumped in US$250 million to become the top investor in Southeast Asian mobile taxi-booking application GrabTaxi Holdings Pte Ltd, its biggest investment in a Southeast Asian Internet firm.

GrabTaxi, which allows customers to order cabs closest to their location by mobile phone, operates in Singapore, Malaysia, Thailand, Vietnam, Indonesia and the Philippines. In a statement, the two companies said the funding will be used to accelerate the app’s expansion in the region.

to cut 2015 capital spending by 15 to 20 percent.

Petronas’ delay is just the latest blow to British Columbia’s fledgling LNG export industry, which the province is banking on to bolster government coffers and create thousands of new jobs.

While 18 terminals have been proposed for the Pacific coast province, with companies like Petronas, Royal Dutch Shell and Chevron Corp all vying to send Canadian gas to markets in Asia, no final go-ahead decisions have been made.

Petronas said despite the delay, it is working with regulators on permitting and will continue to invest in natural gas development in British Columbia.

The company said it hopes to resolve the outstanding issues “as soon as possible” in order to tap into demand from buyers over the next few years and not lose out to competing projects in the United States.

Reuters

The investment in GrabTaxi comes about a month after SoftBank and its billionaire CEO and founder Masayoshi Son announced a US$627 million funding into online marketplace Snapdeal as part of a plan to put US$10 billion into India’s booming online retail market.

SoftBank also said in October it will lead a US$210 million investment round with existing investors in India’s ANI Technologies, which owns a mobile application for taxi bookings.

The Japanese firm is the largest investor in recently listed Chinese e-commerce giant Alibaba Group Holding Ltd. Including the SoftBank investment, GrabTaxi has raised US$340 million in funding. The statement did not specify how much of GrabTaxi SoftBank will own.

Other investors in GrabTaxi, which was developed by two Harvard Business School graduates and launched in Malaysia in 2012 as MyTeksi, include a unit of Singapore state investor Temasek Holdings and U.S. investor Tiger Global Management.

Taxi-hailing apps have become popular in Southeast Asia, especially Singapore, one of the most expensive places in the world to own a private car.

Finding a cab during peak hours and during frequent tropical downpours can be difficult in the city-state, which last month said it planned to start regulating thirdparty taxi booking services for the first time.

Heavy traffic in cities such as Manila and Jakarta also makes finding taxis tough.

Those troubles are benefitting apps such as GrabTaxi. Over the past year, the number of users of the mobile app has jumped six-fold to about half a million and taxi drivers in its network have grown four-fold to 60,000, according to the company.

Reuters

Cambodian Prime Minister Hun Sen will visit South Korea next week in order to further enhance bilateral ties and cooperation, the Ministry of Foreign Affairs said yesterday. During his stay in South Korea, the prime minister will attend an ASEAN-South Korea commemorative summit on December 11-12 in Busan, and pay an official visit to the country on December 13-14.

Hun Sen will meet with SK president Park Geun-hye and the two leaders will preside the signing ceremony of five documents, covering the bilateral cooperation in education, business, intellectual property, health care and medical science, and banking and finance.

Vietnam hosts int’l exhibitions on trade More than 420 businesses from 16 countries and territories are showcasing their latest products and services at the 12th Vietnam International Trade Exhibition (Vietnam Expo 2014) and the 4th International Bicycle Exhibition (Vietnam Inter Cycle 2014). The exhibitions drew participation of more than 420 businesses from countries and territories like France, Japan, South Korea, China, India, Malaysia, Indonesia, Nepal, showcasing their latest products at 450 pavilions. Particularly, India, China, China’s Taiwan, South Korea and Indonesia have been taking part in the annual event for 12 consecutive years.

Bangladesh remittances total US$6.20 bln Millions of Bangladeshis in the first five months of the current 2014-15 fiscal year ending June next year remitted home US$6.20 billion, a central bank official said. The Bangladesh Bank (BB) official who preferred to be unnamed said Bangladeshis remitted home US$6,197.88 million in July-November, 11 percent higher than the same period a year ago. Overseas Bangladeshis in November sent home 1.17 billion dollars, 10 percent lower than that in the same month a year earlier, said the official. According to the official, in October the remittances stood at US$1.02 billion.

Gasoline price in Japan drops The average price of regular gasoline in Japan was down to 157.40 yen per litre (US$1.31), its lowest level since December 2 last year, local media reported. According to the Japanese Natural Resources and Energy Agency, the retail price has dropped for 20 months in a row as of this week, which is the second longest on record, following 25 straight weeks of fall from September 2006 to March 2007. Gasoline prices are expected to keep falling following the Organization of Petroleum Exporting Countries’ decision last week to keep their production ceiling unchanged.

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December 5, 2014

International EU disburses 500 mln euros loan to Ukraine The European Commission disbursed 500 million euros (US$615 million) to Ukraine, according to an official statement posted on the commission’s website. This is the second and final loan tranche of the EU’s 1 billion euros Macro-Financial Assistance(MFA) program for Ukraine approved earlier this year. The purpose of the program is to support Ukraine financially while encouraging its structural reforms, according to the statement. The funding for Wednesday’s disbursement was raised by the European Commission on financial markets on November 26, by increasing an already existing 15-yearbond.

S. African Government diminish corruption accusation The Times newspaper on Wednesday commented that South Africa “is at a point of no return” with a sensational headline “SA in dodgy territory”

British gov’t unveils stamp duty reforms British government unveiled Stamp Duty Land Tax reform which will cut the tax for 98 percent of home buyers and impose higher tax on buyers of luxury houses.

The current stamp duty system will be replaced by a graduated rate, working in a similar way to income tax. Under the new calculation, no tax will be levied on the first 125,000 pounds (US$196,250) of a property, followed by two percent on the portion up to 250,000, five percent up to 925, 000 pounds, 10 percent up to 1.5 million pounds and 12 percent on that part that above.

Job market reform approved in Italy A draft law to reform Italy’s job market received final approval, with Prime Minister Matteo Renzi’s cabinet winning a crucial confidence vote in the Upper House. The reform, dubbed “Jobs Act”, had already been passed by the Senate at its first reading in October and by the Lower House in late November. The Jobs Act aims at making Italian job market more flexible, and it would change the current unemployment welfare system by broadening benefits for categories of workers to which they do not apply today.

Chile raises US$2 bln in sovereign debt issue Chile raised US$2 billion via a double bond placement on Wednesday, which Finance Minister Alberto Arenas said was the country’s biggest sovereign issue since it returned to democracy and international debt markets in 1990. The South American country placed an 800 million euro bond, followed by a US$1 billion U.S. dollar-denominated bond. Both were oversubscribed by between three and four times, said Arenas. The dollar portion of the trade priced at a spread of 90 basis points over U.S. Treasuries.

Spain’s consumer confidence falls Spain’s consumer confidence fell by 3.2 points from October to November to 83.6 points indicating a negative perception of Spain’s economic situation according to data unveiled by the Sociological Research Centre (CIS). The Consumer Confidence Indicator (CCI) ranges between 0 and 200 points, with ratings over 100 points considered as positive perceptions of the economic situation and ratings below that figure indicating a negative perception.

According to the CIS, the fall in Spain’s consumer confidence was due to drops in the indicator of people’s expectations about the future and the indicator of the current economic situation.

South African President Jacob Zuma (C) talks as he meets with Chinese Premiere Li Keqiang (not pictured) at the Great Hall of the People in Beijing, China, 04 December 2014. Zuma is on an official vist to China from 03 to 06 December

T

he South African government yesterday rejected reports that the country has reached “a point of no return” in terms of corruption.

“We acknowledge that there is a level of corruption across society, and that together we must confront it wherever it rears it’s head. However, it is pessimistic to state that South Africa is at a point of no return,” Acting Director General of the Communication Department Donald Liphoko said in a statement.

Transparency International’s 2014 Corruption Perceptions Index rated South Africa 44 out of 100.

Last year South Africa scored 42.

The lower the score the more corrupt a country is perceived to be.

Of the 175 countries scored, South Africa was ranked 67th. Last year South Africa was 72nd out of 177.

“Such misleading media reports are unhelpful in building the country but are feeding into a pessimistic outlook that can only damage our national psyche and prospects for economic growth,” said Liphoko.

The media, he said, should not only report the facts but enrich the country’s debate on important national issues in a responsible manner.

The country’s legal and institutional

Brazil’s Congress loosens 2014 fiscal goal in bruising vote Anthony Boadle

P

resident Dilma Rousseff won a hard-fought victory in Brazil’s Congress early yesterday with the passage of legislation that frees her administration from complying with its fiscal savings goal for this year.

The amendment to the budget law, approved in a heated 17-hour joint session of Congress, allows her government to deduct infrastructure investments and tax breaks to lower the primary surplus goal to one tenth of its original level.

Since narrowly winning re-election in October, Rousseff has vowed more fiscal discipline and picked a fiscal hawk as her next finance minister to regain the trust of investors and avert a credit rating downgrade.

Her government continues to send mixed signals, however. On Wednesday, it approved a 30 billion reais (US$11.7 billion) loan to state development bank BNDES, a transfer that has been widely criticized in the past for increasing Brazil’s debt burden.

Fiscal accounts have deteriorated on Rousseff’s watch to the point where Brazil risks ending 2014 with its first annual primary deficit in two decades.

Rousseff’s opponents accused her allies in Congress of throwing fiscal discipline out of the window and handing the president a blank check to spend recklessly.

Approval of the amendment took two weeks due to obstruction

frameworks as well as public policy pronouncements stand vehemently against corruption, Liphoko said.

To put this into perspective, the latest annual Corruption Perceptions Index indicates that South Africa has made recognizable improvement in its fight against corruption, said Liphoko.

“The government has tested mechanisms and bodies dealing with allegations of corruption, and we should recognize the on-going work done by such bodies to root out corruption,” he stressed.

Since the advent of democracy in 1994, the country has adopted a series of anti-corruption legislations, including the Promotion of Access to Information Act, the Promotion of Access to Justice Act, the Prevention and Combating of Corrupt Activities Act, the Public Finance Management Act and the Municipal Finance Management Act. South Africa is a signatory to the United Nations Convention against Corruption.

“These laws form a solid legislative basis to fight corruption. As a signatory to the Convention, we are obliged to implement a wide range of anti-corruption measures aimed to promote the prevention, detection and sanctioning of corruption,” said Liphoko.

As envisaged by the National Development Plan, South Africa will be a society in which citizens do not offer bribes and have the confidence and knowledge to hold public and private officials to account, and in which leaders have integrity and high ethical standards in 2030.

“Our efforts should be focused on making this vision a reality,” Liphoko said.

Xinhua

Approval of the amendment took two weeks due to obstruction tactics by opposition parties

tactics by opposition parties and lukewarm support from within Rousseff’s coalition.

Rousseff secured the votes of her allies by decreeing a 444 million reais increase in funds for pork barrel projects that depended on passage of the budget goal amendment.

The amendment allows the government to deduct 106 billion reais from its primary surplus goal of 116 billion reais, which lowers the fiscal savings target to the equivalent of 0.19 percent of gross domestic product from the official goal of 1.9 percent. In the first 10 months of this year, the primary balance showed a deficit of 11.5 billion reais.

Reuters

Business Daily | 15

December 5, 2014

Opinion Business

wires

Leading reports from Asia’s best business newspapers

THE KOREA HERALD The nominee for the head of South Korea’s corporate watchdog said yesterday that he will beef up monitoring of market leaders that hamper the entry of new competitors in the market. Jeong Jae-chan, named to lead the Fair Trade Commission (FTC) last month, also said that he will ramp up crackdowns on price rigging and international cartels. “I will step up monitoring and enforce laws in accordance with principle for market leaders that are abusing their monopolistic power to hamper new competitors from entering the market and hurting the interests of consumers,” Jeong said during a confirmation hearing.

TAIPEI TIMES Taiwan could face secondphase water rationing before next year’s Lunar New Year holidays, with thirdphase rationing possibly looming by May amid the worst drought in the past decade, Minister of Economic Affairs Woody Duh said.

“This is a serious drought we are facing now. The water-storage levels of the reservoirs across the nation are only 20 to 30 percent of the annual average,” Duh told reporters before the ministry’s emergency meeting on water supplies.

Duh said the ministry is working to maintain normal water supplies for household use and to avoid rationing before the February holidays.

THE JAKARTA POST The number of Indonesian airline passengers traveling within the archipelago during the first ten months of the year rose by 5.96 percent to 48.49 million people, from 45.76 million people in the same period last year, Central Statistics Agency (BPS) data revealed. Meanwhile, Indonesians who flew to international destinations from the nation’s major airports surveyed by the BPS during January–October 2014 climbed by 5.65 percent to 11.33 million passengers compared with the same period a year ago.

THE TIMES OF INDIA The government set up a High Level Committee (HLC) to interact with trade and industry and identify areas where clarity on tax laws is needed, a move aimed at boosting confidence among taxpayers. The panel will be headed by former chief economic adviser Ashok Lahiri and includes Sidhartha Pradhan, former member of Settlement Commission (income tax and wealth tax) and Gautam Ray former DG (audit) customs and central excise. The HLC will submit half-yearly reports to the finance minister Arun Jaitley.

Japanese Prime Minister Shinzo Abe raises his arms with his supporters and a candidate during his election campaign tour in front of a local fishery association branch at a fishing port in Soma

Can Japan reboot?

Kenneth Rogoff

Former chief economist of the IMF, is Professor of Economics and Public Policy at Harvard University

J

apanese Prime Minister Shinzo Abe’s recent policy decisions – to increase monetary stimulus dramatically, to postpone a consumption-tax increase, and to call a snap election in mid-December – have returned his country to the forefront of an intense policy debate. The problem is simple: How can aging advanced economies revive growth after a financial crisis?

The solution is not.

It is now clear that the first round of Abe’s reforms – known as “Abenomics” – has failed to generate sustained inflation.

Hopes for continued recovery have now given way to two consecutive quarters of negative growth. The question is whether Abenomics 2.0 will put Japan’s economy back on the path to renewed prosperity.

My own view is that the “three arrows” of Abenomics 1.0 basically had it right: “whatever it takes” monetary policy to restore inflation, supportive fiscal policy, and structural reforms to boost long-run growth. But, though the central bank, under Governor Haruhiko Kuroda, has been delivering on its side of the bargain, the other two “arrows” of Abenomics have fallen far short.

There has been no significant progress on supply-side reforms, especially on the core issue of how to expand the labour force. With an aging and shrinking population, Japan’s government must find ways to encourage more women to work, entice older Japanese to remain in the labour force, and develop more family-friendly labour policies. Above all, Japan needs to create a more welcoming environment for immigrant workers.

There has been some move-

ment on immigration. Panicked by deadlines for the 2020 Summer Olympics in Tokyo, the government managed to clear the import of foreign construction workers (though the decision had to make its way through a half-dozen ministries).

But overall progress has been slow. Japan desperately needs more nurses and hospice workers to care for its aging population, but bureaucratic and political resistance to immigration is deeply entrenched.

When I first started asking my Japanese academic friends about Abe’s supply-side reforms, they said, “Don’t worry, they’re coming.”

Then, after a while, they would say, “Don’t worry, they’re coming – but slowly.” Recently, the mantra has changed to, “Don’t worry, we still think they’re coming.” One can only hope so. Without structural reforms, especially of the labour market, Abenomics cannot succeed in the long run.

The timing of the April 2014 consumption-tax hike (from 5% to 8%) was also unfortunate. It would not have been easy for Abe to postpone the move, given that it had been locked in place by broad-based political agreement before he took office. But the government

could have engaged in more aggressive fiscal stimulus to counteract the hike’s short-term effects. Instead, two successive quarters of negative growth have had a dispiriting psychological impact.

True, the slump is partly an illusion: the earlier boom was fuelled by Japanese households’ effort to beat the tax by front-loading purchases of consumer durables – a nuance that seems to have been lost in the public debate. But the big picture remains: Abenomics so far has failed to turn around a deflationary mind-set.

Mind you, Japan’s outsize government debt and undersize pension assets are a huge problem, and only the most reckless and crude Keynesian would advise the authorities to ignore it. For the moment, the risks are notional, with interest rates on ten-year government debt below 0.5%. But saying that Japan’s debt is irrelevant is like saying that a highly leveraged hedge fund is completely safe; the risks may be remote, but they are not trivial. Think about what would happen if the Bank of Japan actually managed to convince the public that inflation will average 2% on a sustained basis. Would ten-year interest rates still be 0.5%?

The big picture remains: Abenomics so far has failed to turn around a deflationary mind-set

What if other factors – say, a sharp decline in emerging-market growth – led to a sharp rise in global real interest rates, or a rise in risk premia on Japanese debt? In principle, Japan could weather such shocks without high inflation or other extreme measures, but it is folly to deny the country’s vulnerability. A hedge fund can simply go out of business; that is not an option for a great nation.

Fiscal sustainability requires an eventual rise in the consumption tax, and of course Japan should not wait until international investors start doubting its willpower.

The problem is in the timing and tactics. Postponing the second consumption-tax increase seems like a good compromise between pushing Abenomics to escape velocity and maintaining long-run credibility.

But this brings us back to Japan’s deeper problems. Demand policies alone will not alone prevent two more lost decades, much less guarantee two golden ones. Demographic decline was a key factor in setting off Japan’s 1992 financial crisis and the long malaise that followed. Japan is still a rich country, but its ranking in terms of real per capita income has now slipped below that of many other advanced economies – including the United Kingdom, by some measures – and far below that of the United States.

Japan’s experience holds important lessons for Europe, the main one being that stimulus policies, though necessary in the short run to support demand, cannot address longterm structural deficiencies. If Abenomics 2.0 fails to embrace deep structural reform, it will fare no better than the original.

Project Syndicate

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December 5, 2014

Closing Vietnam to cut import tax rates on auto products

Online audio-visual market revenue to beat record

Vietnam will cut import tax rates for specific auto products since the beginning of 2015, the Ministry of Finance said yesterday. The import tax for passenger cars will be cut from the current 67 percent to 64 percent and that for four-wheel-drive vehicles from 59 percent to 55 percent. The rate for trucks with gross weight of less than five tons will be reduced from 59 percent to 56 percent, according to a circular issued by the ministry. Meanwhile, the vehicles tax for some types of motorcycles and bicycles equipped with supporting engines will fall to 40 percent.

The revenue of China’s online audio-visual market in 2014 is expected to reach a record 37.8 billion yuan (US$6 billion), according to a report released at the Sixth China Network Audio-Visual Industry Forum in Shanghai yesterday. Among the revenue, 53 percent comes from online video, 21 percent from online music and 13 percent from mobile phone TV, according to the report. As of July this year, China’s online video audience reached 439 million, covering more than 70 percent of the total Chinese Internet users. The mobile phone video audience surpassed 300 million, according to the report.

China mobilises social investment to heal environment

C

hina is seeking social investment for environmental protection projects as a shortage of government funds impedes pollution control.

In a guideline published by the State Council on November 26, the central government announced it will further ease market access to key industries, promoting environmental protection by offering new forms of investment.

At last November’s third plenary session of the 18th Central Committee of the Communist Party of China, a master reform plan was released that called for the market to play the decisive role in resource allocation.

Statistics from the National Audit Office show local governments were liable for a total direct debt of 20.69 trillion yuan (US$3.4 trillion) at the end of last June, as well as another 9.5 trillion yuan of debt with limited liabilities.

Wu Xiaoqing, deputy head of the Ministry of Environmental Protection,

said on November 25, it is estimated that more than 6 trillion yuan should be invested in treating air, water and soil pollution.

According to Wu, the investments by the central and local governments lag far behind the actual needs.

Worse still, public funds are not efficiently used and the problem of embezzlement sometimes appears.

An environmental protection financing mechanism in accordance with the market rules is badly needed, he said.

To fill the investment gap, the Ministry of Finance is actively promoting the Public-PrivatePartnership(PPP) for infrastructure and public service.

The PPP refers to the partnership between government and private organizations based on

franchise agreements. It aims at constructing urban infrastructure or providing public service.

The innovative financing model is already paying off in parts of the country.

The government in southwest China’s Guizhou Province and the Asian Development Bank (ADB) have agreed to cooperate in broadening financing channels to attract more capital for protection and green development of Chishui River, a major watershed in Guizhou.

According to a memorandum signed in July, the two will jointly develop

Criticism of the government’s smog control puts China’s grim environment issue in the spotlight

a water fund and promote related policies.

The government of Harbin, capital of northeast China’s Heilongjiang Province, jointly established an environmental investment company with the CECEP L&T Environmental Technology Co., Ltd. With a total investment of 3.5 billion yuan, the company will attract social investment by providing mortgage loans and franchise agreements.

Zhang Yufei, mayor of Harbin, said, the government lacks money to meet the public’s need in terms of environmental

protection, and it is important to form a feasible business mode to support the PPP projects.

“We should make the PPP projects profitable in order to attract social investments,” Yu Xiaodong said, China can examine the Superfund program in the United States, he said. The Superfund, established in the 1980’s, is the federal government’s program to clean up uncontrolled waste sites.

The program allows comprehensive management that helps solve problems with technology, financing, and legal affairs, he said.

Wu Xiaoqing says the government should take a leading role in operating the environmental protection fund.

In order to attract more social capital, the government should seek to innovate the credit service and develop equity and bond financing in key pollution control projects, he said.

Xinhua

Haitong in talks to buy unit of BES

Hong Kong, Shanghai push higher

C

S

hinese brokerage Haitong Securities Ltd is in talks to buy the investment banking unit of the bailed-out Portuguese lender Banco Espirito Santo (BES), according to a person with direct knowledge of the matter.

Haitong, which raised US$1.7 billion through a Hong Kong listing in 2012, has been looking to expand into overseas markets, as a way to help Chinese clients to buy foreign assets.

The person did not disclose the potential acquisition price.

Bank of Portugal rescued BES using 4.9 billion euros (US$6.03 billion) of public funds in August this year and the central bank is now seeking to recoup those funds by selling parts of the businesses.

Haitong is looking to buy Banco Espirito Santo de Investimento SA, BES’s investment banking arm, the person said, declining to be identified as the information is not public.

Haitong shares were halted yesterday pending an announcement. A spokesman for Haitong declined to comment when asked about the acquisition.

Reuters

Thailand, Myanmar to revive Dawei zone

T

hares in Hong Kong and Shanghai soared yesterday following another record close on Wall Street, while mainland investors looked to capitalise on a recent rally.

The Hang Seng Index jumped 1.72 percent, or 403.94 points, to 23,832.56 on turnover of HK$117.48 billion (US$15.16 billion).

Shanghai surged 4.31 percent, with the benchmark Shanghai Composite Index soaring 119.93 points to 2,899.46 on turnover of 509.2 billion yuan (US$82.9 billion).

The Shenzhen Composite Index, which tracks stocks on China’s second exchange, gained 2.00 percent, or 29.04 points, to 1,481.96 on turnover of 360.0 billion yuan.

Traders were given a strong lead from the United States, where the Dow and S&P 500 ended at new record highs in response to an upbeat report on the world’s number one economy from the Federal Reserve.

The central bank’s Beige Book stated “a number” of its 12 districts said analysts “remained optimistic about the outlook for future economic activity”.

hailand and Myanmar will sign a pact in January aimed at reviving the multi-billion dollar Dawei industrial zone in Myanmar, a Thai minister said yesterday. Deputy Transport Minister Arkhom Termpittayapaisit, who is also secretary-general of the National Economic and Social Development Board (NESDB), said the Thai and Myanmar governments would meet to kickstart what is arguably Southeast Asia’s most ambitious industrial zone.

“At the start of January 2015 the Thai and Myanmar government will sign a Memorandum of Understanding (MoU) to move forward the Dawei special economic zone,” he added.

He said he hoped Italian Thai Development Pcl and Rojana Industrial Park Pcl would play a role in the first phase of the project.

His comments come after Thailand and Myanmar seized control of the strategically located complex from Italian Thai Development (ITD), Thailand’s biggest construction firm, in November 2013.

The Dawei Special Economic Zone complex was described by ITD as “the new global gateway of Indochina”.

AFP

Reuters